usa football is best:
A small pumping charge is all it cost all IEA countries to "speculate"?

Surely that can only be true for the US - but in your words even for the US Government there is some cost involved in doing that- would you not think that this non prudent spending should be investigated?
How much does it cost the EU countries? Are they subsidizing indirectly the US driving season?

Let`s see the true cost of this political intervention in a commodity market per country example:
60m barrels - to be replaced with a "pumping charge" of US$10 is only US$600 000 000 ...

There are several consequences that are, more or less, obvious from this: Firstly, this is likely to disrupt the oil derivatives market and wreck harvoc on the speculators earnings(long buyers in particular, who, from now on, are likely to start factoring-in the reaction of the IEA into their pricing strategy. This is likely to back fire in the long run for the industrialised economies as thier direct intervention is unsustainable. In this instance, the OPEC and other oil producers as well as the speculators are being agrieved by this intervention. The effect on crude price remains to be seen if these two players choose to stick together to recoup their losses as well. The loss from this intervention to the derivatives markets is likely to quite substantial. To OPEC member countries, the loss earning is likely to be several billions of dollars depending on how long it takes for the reduced prices of crude to remain in effect. Obviously the Ahmadinejads, the Chaves and other hard liners within the OPEC will not seat back and watch their revenue dwindle by this sort of intervention. They are almost certain to force supply down(well below the IEA's 60 million barrels ?) to force-up the equilibrium price and return the market to a price level even worse than the status quo ante.
Further consequence of this intervention is that OPEC might then ask the IEA to use their spare capacity to generate extra supply whenever crude supply is threatened in future. Another consequence is that, this is likely to alienate the Saudis and waterdown their future balancing efforts within the OPEC bloc. With true reserve of Sudis considered to be about 40% over stated, this may cause real problem in the future for the west as even the Saudis may be reluctant to unilaterally fill a supply shortfall in the future. One important remark that I must add to this is that this is not the case of a zero-sum game. What the west seeks to gain via supply intervention is far outweighed by the potential loss of earning to the OPEC bloc and the derivative market players. Given that the loss to the derivative players is firmly going to rest with the same western banks and investors, I would have preferred that the IEA did not interven directly, but rather through a surrogate boutique. This is more of a publicity stunt for Obama administration, but albeit a dangerous one. With the the Greeks's debt firmly on course to disrupt global economic recovery, a self-made turbulence in the energy market is, certainly, undesirable at this moment in time.

Better to use reserves to lower prices (even if briefly) than to stockpile to drive them up.

In the end, oil will eventually run out whether you build up reserves or not. Dumping barrels into the market at this time takes the stress off most economies. If oil suppliers view their purchasers as actual clients (rather than junkies always looking after the next fix) and help them in times of need, such as this one it would be mutually beneficial seeing that what countries now save from the lowered prices they might spend later on when the economy recovers. Possibly and plausibly, these measures might help shift the tide earlier than if you let the prices grow organically.

Personally, I prefer a tax on oil as opposed to subsidizing "alternative energy" because a tax is simpler for people to deal with - it offers fewer unintended consequences. A subsidy requires the government to choose between "winners" and "losers" which very often turns around which or who is more politically connected (think ethanol) or which is the “flavor of the month (think nuclear power in the 1950’s)”. If the price of oil were permanently raised by a tax:

a. More of that increased price would stay in the US - as opposed to winding up in the hands of Wahabists, or crooks, or radical leftists;

b. A higher cost of energy in general would encourage conservation;

c, It would encourage a plethora of new technologies and investments in energy conservation and in new sources of energy;

and,

d, it wouldn’t be susceptible to the political vagaries of foreign governments. Admittedly there are plenty of vagaries domestically, but at least we could make our own mistakes.

And of course, we just need the revenue to help deal with our domestic debt!

Just one thing on the oil tax. Oil powers a significant portion of the economy, do we really want to tax the figurative and literal fuel of the economy?

In the long run oil taxes maybe helpful at encouraging behavioral changes and alternative innovation, but at the cost of reduced short-term growth. Perhaps a compromise can be reached where oil isn't taxed but alternate energies development are subsidized .

ironic,when the price reach 149 barrel there is on move in IAE,today 115 they eager to dump it? IEA the puppet of USA want to strik on Russia for the sanction of Syia. the dirty oil and westen democracy is.

The reserve is asset. US and the West are in huge debt. Will they be able to get money for buying back the oil? As the supply is controlled by others, IEA cannot ensure they can refill the reserve with a profitable price. Will the West be willing to refill with a loss? The reserve may be gone for ever.

What is the benefit? Interfering the market for political reason only is crazy. The Chinese should thank the West for giving them a chance to build their own reserve with a better price.

Market economy has many defects, but they can not be corrected with such interventions. This is like rotten sack towels. It will break again in another place. Reserves must have both oil and other fuels and food, because the world becomes an increasingly uncertain and crowded place, The climate and growing wild. We are beginning the transition from a carbon economy to solar and nuclear. This transition is delayed, and fuels are being depleted faster. Every 10 years the price of oil will double and against it can not do anything. The peak in oil production has long passed.

When this decision was made two weeks ago crude price models were projecting this multi-month price run would terminate @ $136/barrel. The ramp-up for another 1 million barrels/day from Aramco will take 90 days. Geopolitical events (Greece) among other factors appear to have truncated the spike, but it was prudent to carry on.

Perhaps a side benefit assisting that choice was the harm even lower prices could have in Iran ... repeating the measure agin the USSR.

The intervention by the USA and IEA IS WELCOME NEWS FOR DEVELOPING COUNTRIES WHOSE ECONOMIES ARE GETTING SHATTERED BY THE EVER INCREASING CRUDE OIL PRICES......... HOWEVER THIS INTERVENTION CAN AT BEST BE A STOP GAP ARRANGEMENT......... THE ONLY PERMANENT SOLUTION IS TO FIND REPLACEMENTS FOR FOSSIL FUELS, SO THAT THE ECONOMIC BLACKMAIL BY OPEC COUNTRIES CAN BE PUT AN END TO; ONCE AND FOR EVER........

I just wonder how many times has the Oil looby guaranteed that no government actions will stimulate the replacement of this dirty source of energy for a clean one. We have several cheap alternatives for years already. Wind, geothermal, solar plant (With mirrors and boiler - ok, this is a new one). Not to mention biofules, which I'm not considering given their effets over food prices.

What could have stopped the world from already replacing Oil for wind power in a large scale ? Two words: OIL LOOBY. Have you guys seen "Syriana" motion picture ? It shows it all...

Call me a cynic! - we had this discussion yesterday and all "Americans" pointed out the huge (political?) impact of the US driving season...
The TE could have investigated this effect as meddling with prices was going on in previous years. No wonder that Europeans like Mrs Merkel get the Freedom Medal while a dangerous bacterium is around at home...

The strategic reserve should only be used in emergencies - there is no such scenario around...

Let`s see - when are we filling up all this emergency reserves?
In European winter times when prices are already up and will further accelerate through these purchases?

I would like to know at what price the reserves were sold and at what price the reserves will be refilled!

I agree with many I disagreed previously the best medicine is high oil prices at the pump particularly in America!

Let`s not forget - the US car industry is heavily dependent on low gas prices...

What people don'e understand about Saudi Arabia is that even with this huge supply expansion they still have 200% extra capacity.

This entire article is somewhat propaganda because it does not take into account the fact that once the Saudis release their extra supply, they will invest BILLIONS into expanding their supplies again.

Unlike the US, the Saudis CAN in-fact, Drill-Baby-Drill to help the world economy because their cities are LITERALLY built on Seas of Sand and Oil. The Saudis won't run out of oil anytime soon, and at $100 a barrel, they won't stop drilling. If/when prices drop below $50, you'll see the IEA lock their 'emergency supplies' up.